Father's Day is almost here. If your father is handy around the house, you might be considering giving him tools of some kind. Of course, drills, sanders, saws and screwdrivers make excellent gifts, but this year, why not give Dad something that can help him build his future? Specifically, why not give him a "financial toolkit'?
What could go into this toolkit? Here are a few suggestions:
*Stocks -- You may want to give shares of a company that produces products or services that your father uses. If you're going to give some of your own shares, you'll need to know what your originally paid for the stock, how long you've held it and its fair market value at the date of the gift. Your father will need this information to determine gains or losses if he decides to see the stock.
*Bonds -- Is your father is at or near retirement age, he might benefit from the interest payments provided by bonds. If you give your father a municipal bond, the interest is free from federal taxes, and if the municipality that issues the bond is located in your father's state, the interest also may be exempt from state and local taxes. However, some municipal bonds-particularly airport and housing bonds-might be subject to the alternative minimum tax (AMT), so you'd want to be pretty familiar with your father's tax situation before giving him and AMT-susceptible bond.
*IRA contribution -- As long as your father is working, he can contribute to a traditional or Roth IRA-and he should, because an IRA offers tax advantages and a wide array of investment options. Your father can put in up to $6,000 to an IRA if he's 50 or older, or $5,000 if he's under 50. While you can't make a deposit into your father's IRA, you can give him some money for that purpose.
*Education -- Even if your father has been investing for a while, he could probably still benefit from some additional knowledge. Consider giving him a subscription to a magazine that focuses on financial issues. Or you might want to give a book on investing, such as Dr. Jeremy Siegel's Stocks for the Long Run, generally considered one of the most valuable and "user-friendly" books for both new and experienced investors. A word of caution, though: Stay away from those books that seem to "promise" huge investment success if readers follow the techniques described by the author.
*Games -- You can find a variety of investment-related games that are both fun and informative. These games often use real-life scenarios to depict the various factors that go into investment decisions and the equally various results that can follow. You can also choose games that focus on other financial issues, such as managing cash flow. You can find these games in the old-fashioned "board game" format and as computer software. A quick search on the Internet will turn up plenty of these games.
Put some of these suggestions to work to create a financial "toolbox" for your dad this Father's Day. He'll likely appreciate your generosity-and he'll be able to put the "tools" to good use.